Investors across the world look up to figures like Warren Buffett in America as their inspiration in the field of investing. The late Rakesh Jhunjhunwala continues to enjoy a similar status in India, thanks to his brilliant investment strategies such as the famous contrarian approach to investing. Read on to know the key aspects of Rakesh Jhunjhunwala’s investment strategies that you can apply in your life.
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Who was Rakesh Jhunjhunwala, and what can you learn from his investment journey?
Here are a few lessons that you can draw from Mr. Jhunjhunwala’s life to earn high returns via mutual fund investments:
· You must research well before investing: Before he became known across India as the “Big Bull of Dalal Street”, Mr. Jhunjhunwala spent several years working with financial firms, where he learnt the fundamentals of investing. He enhanced his skills during this period and understood key market and economic indicators. The lesson that you can learn here is that you must analyse a fund’s past performance thoroughly before you invest in mutual funds.
· Early exposure to stock markets is essential: Legend has it that Mr. Jhunjhunwala started his investment journey during his college days by purchasing 5000 shares of a popular tea manufacturing company at ₹43 per share. He later sold them at ₹143 per share, thereby making a profit of ₹5,00,000 in just three months. You must try and start your mutual fund investment journey as early as you can.
· You should invest for the long term: Having a clear investment goal in mind is extremely important for every investor, and Mr. Jhunjhunwala was no exception to this rule. He had a long-term vision and invested only in businesses that he thought would do well in the long term.
· Diversification is key: Mr. Jhunjhunwala’s investment journey also underlines the importance of diversification. His investment portfolio was spread across several industries and companies, thereby helping him mitigate the risk of loss in the long term. While investing in mutual fund schemes, you must be sure to diversify your portfolio to reduce overall risk.
Key aspects of Rakesh Jhunjhunwala’s investment strategies:
Here are the key secrets of Mr. Jhunjhunwala’s investment strategies –
· He was very good at fundamental analysis: As mentioned earlier, he had the experience of working at financial institutions. He would conduct an in-depth analysis of a company before investing in it.
· The contrarian investing method helped him earn high returns: Mr. Rakesh Jhunjhunwala was known for picking underperforming stocks that had the potential to grow. Contrarian investing would help him generate additional income in the long term.
· He understood macroeconomics and invested accordingly: Several macroeconomic factors impact investment returns, and Mr. Jhunjhunwala was very cognizant of these changes taking place in India and across the world. He tried to manage his investment portfolio accordingly.
· He took steps to mitigate risks before investing: Risk management is a very important part of investing, and Mr. Jhunjhunwala was a master at mitigating portfolio risk.
If you consider Mr. Jhunjhunwala as your investment idol, you must try your best to follow the steps he took to grow his wealth exponentially over time. Analyse mutual funds before investing in them and do your best to mitigate overall portfolio risk.
